The nationwide lockdown to battle coronavirus pandemic is likely to result in huge job losses, pay cuts and freeze on hiring over the next few quarters, thereby giving blues to India’s already distressed employment story.
Based on the best available estimates currently, there could be an estimated job loss of 10-12 million, across travel, tourism and hospitality sectors. The manufacturing sector is directly dependent on how soon the government lifts the lockdown, thus enabling people to go back to work.
Other worst-hit sectors are automobile & auto-components, MSMEs, consumer durables and capital goods sectors. These sectors will face the greater burden of the slowdown. India’s economy is expected to slow down to 2% from the current around 5% levels, while many other major economies of the world are going to be in the negative zone.
“With fear, uncertainty and doubt looming large on the future of the businesses across various sectors, one of the worst-hit sectors like hospitality sector has already terminated services of contract workers. Out of an estimated 20 million workers engaged in the tourism, travel and hospitality sectors, an estimated 50% jobs will be affected,” Devesh Agarwal, President, BCIC and Managing Director, Jasons Technologies Pvt Ltd told DH.
The revenue loss in the tourism, travel and hospitality sectors is pegged at $21 billion over the next one year, Agarwal added.
The total working population in India is pegged at 490 million.
Consumer durables, automotive, auto components, white goods, capital goods, IT, startups and MSMEs sectors will be among the worst affected. The IT sector, which employs around 4 million engineers, is likely to witness around 5% job losses, says T V Mohandas Pai, venture capitalist and former HR director, Infosys.
The signs are already visible with the unemployment rate in states like Goa, Uttarakhand, Odisha and Tamil Nadu surging by up to 4 times in just a matter of a month.
"As I see it, jobs in many sectors like hotels, tourism, airlines, airports will disappear. Similarly, jobs in auto, auto ancillaries will disappear," says Kris Lakshmikanth, CEO at Headhunters.
While start-ups, which are usually cash strapped, are in the process of building, their demand is not likely to pick up immediately after the lock down. This can lead to huge job losses.
Navneet Singh, Founder & CEO, Avsar HR services said, “Many US authorities are calling for suspension of H-1B visa programme, which is a clear indicator of potential growth in layoffs. Many organisations have pledged not to pursue any significant layoffs, but it can adversely impact their cost structure in the long run.”
He mentioned startups have already turned to layoffs and salary cuts.
Vikram Ahuja, Co-Founder, Talent 500 by ANSR said, “For at least six to nine months, any non-essential hiring will slow down as companies will take a conservative approach.”
Even as the financial sector hasn't been much affected because of the lockdown till now, the remunerations in the mutual fund industry may take a massive hit, as the returns on mutual fund schemes across the board are in deep red due to the bloodbath in the stock markets, industry sources told DH.
"The situation right now is very fluid. While the daily wagers and the gig workers have already been hit, the situation in the organised sector is far more stable right now,” says Lohit Bhatia, President Workforce Management at Quess Corp.
Rituparna Chakraborty, Executive Vice President, Teamlease Services Ltd said: “It is very difficult to make an estimate at this stage as to how many jobs will be lost. The future is uncertain and the situation is changing very fast. Just a month ago, large number of companies had finalised their hiring plans for FY21. With the lockdown coming due to COVID-19, all those firms have put their recruitments on hold for next couple of months.”
According to Infosys co-founder and chairman of Axilor Ventures, Kris Gopalakrishnan, a prolonged lockdown will result in a freeze on hirings and recruitment in IT firms, in the short term. "If this gets prolonged, we could be looking at a freeze on promotions, increments for a year.”